Unit 4 key words

• What does the Average Rate of Return (ARR) measure?

  It measures and compares the profitability of an investment over its life.
• What is a Break-Even Forecast?


  It is a prediction about the break-even quantity based on estimates of future sales revenues and costs.
• What is the Break-Even Quantity?


  It is the amount a business must sell to cover its costs without making a profit or a loss.
• How is Cash defined in a business context?

  Cash includes not only notes and coins but also money in a bank account.
• What is a Cash Flow Forecast?


  It is a statement showing the expected flow of money into and out of a business over a period of time.
• What does the Closing Balance represent?


  It is the amount of cash left at the end of the month, which becomes the opening balance for the next month.
• What is Crowdfunding?


  Crowdfunding is money raised through an appeal to the public.
• What is Expenditure in a business context?

  Expenditure refers to money that the business pays out.
• How are Expenses defined?


  Expenses are the costs of operating a business.
• What is the Finance Function in a business?


  It is sometimes referred to as the finance department and is only found in larger businesses.
• What does Financial Information include?


  It includes details of profit, loss, cash flow, break-even, profit margin, and average rate of return.
• What are Fixed Costs?


  Fixed costs are the costs that stay the same as output changes, such as rent.
• How is Gross Profit calculated?


  Gross Profit is calculated as sales minus the cost of sales.
• What is the formula for Gross Profit Margin?


  Gross Profit Margin is calculated as Gross Profit divided by Sales multiplied by 100.
• What is Interest in a financial context?


  Interest is the amount of money that has to be paid on borrowed money.